A month has gone by since the last earnings report for Maximus (MMS Quick QuoteMMS - Free Report) . Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Maximus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Maximus Beats Q2 Earnings Estimate

Maximus, Inc. reported mixed second-quarter fiscal 2023 results wherein earnings missed the Zacks Consensus Estimate but revenues beat the same.

Quarterly adjusted earnings (excluding 28 cents from non-recurring items) of 80 cents per share missed the Zacks Consensus Estimate by 2.6% but beat our estimate by 1.7% and decreased 25.2% year over year. Revenues of $1.21 billion beat the consensus mark by 1.3% and our estimate by 2.6%. The figure increased 2.5% year over year. 

Segmental Revenues

The U.S. Services segment’s revenues of $449.7 million, grew 13% year over year. The U.S. Federal Services segment’s revenues of $584.1 million, increased 1.9% from the year-ago reported quarter. The Outside the U.S. segment’s revenues of $173.1 million, decreased 16% year over year.

Sales and Pipeline

Year-to-date signed contract awards on Mar 31, totaled $1.22 billion, and contracts pending (awarded but unsigned) amounted to $1.27 billion. The sales pipeline on Mar 31 was $31.9 billion. This included $5.6 billion in pending proposals, $0.94 billion in proposals in preparation and $25.3 billion in opportunities tracking.

Operating Performance

Operating income of $62.5 million fell 17% year over year. The operating income margin of 5.2% was lower than the year-ago quarter’s 6.4%.

Balance Sheet and Cash Flow

Maximus ended the quarter with cash and cash equivalents of $56.3 million, compared with $40.7 million reported on Sep 30, 2022.

The company generated $309.7 million of cash from operations. Capital expenditures were $18.1 million. Free cash flow amounted to $291.6 million.

2023 Guidance

Maximus expects fiscal 2023 revenues to be in the range of $4.85-$5 billion. Adjusted earnings per share are expected to be in the range of $4.00 and $4.30 per.

Free cash flow is anticipated in the range of $225-$275 million. Interest expenses are expected to be between $82 million and $85 million. The effective tax rate is anticipated in the range of 24.5-25.5%. Weighted average shares outstanding are projected in the range of 61.2-61.3 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 19.37% due to these changes.

VGM Scores

Currently, Maximus has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Maximus has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.